Florida Sinkhole Problem Pushing Homeowners Insurance Rates Higher
Becoming a victim of aÂ Florida sinkhole is a cause for concern for area residents, which is why many are seeking some form of coverage to financially protect their homes.
It appears that insurance companies are also experiencing growing concerns over the increase in sinkholes seen in the state. It’s for this reason that one of the companies, Citizens Property Insurance Corp., has proposed raisingÂ homeowners insurance ratesÂ despite celebrating an increase in profits.
Florida Sinkhole Issue Spreads Throughout State
Florida has long been known as a state that experiences a high number of sinkholes. It, among other states like Alabama, Missouri, Tennessee and Pennsylvania are highly susceptible to this dangerous occurrence that involves groundwater dissolving the rock below land surface.
But sinkholes in Florida have been making headlines, partially because so many have occurred in recent months.Â In March 2013, Jeff Bush was killed when his entire bedroom collapsed and was was pulled 30 feet underground by a sudden Florida sinkhole that gave way.
In August, a sinkhole 60 feet across and 15 feet deep collapsed part of a three-story building included in a resort near Walt Disney World. Two weeks later, another sinkhole swallowed a lake in Ocala, Florida.
While Florida has always been susceptible to sinkholes, experts note that they can become even more problematic in the coming months and years due to overdevelopment in the area. Developers are pumping more water out of the ground for new projects, leaving less support underneath the ground, particularly when heavy rains add water to top soil.
Citizens Insurance Proposes Increase in Homeowners Insurance Rates
To combat the potential losses associated with the Florida sinkhole problem, state-backed property insurer CitizensÂ Property Insurance Corp. is seeking a statewide average 6.6-percent increase in homeowners insurance rates and a 24.8-percent increase in sinkhole rates.
Florida requires insurance companies to offer sinkhole coverage with homeowners insurance. If the sinkhole coverage isn’t a part of the standard homeowners insurance policy, then it must be offered as a stand-alone option. Citizens offers its sinkhole coverage as a standalone option.
Some homeowners have complained that the increase in rates is unfair, particularly since the company has reported an increase in profits, as well as a better overall financial position. The insurer argues, on the other hand, that the profits aren’t particularly stable and could easily be depleted by a major storm.
Citizens proposed the rate increase before the Office of Insurance Regulation on Tuesday night. There is no word on whether the hike, which could result in rates costing tens of thousands for some homeowners, will be approved.